Over the past few years, tequila has been the first choice of booze for a majority of drinkers here in the U.S., with reports indicating that it had even outpaced American whiskey in terms of sales (of course, vodka still reigns supreme). The thirst for agave spirits appears to be slowing, however, according to a recent article in the Financial Times, leaving producers in Mexico with a surplus of spirits that they might have a hard time finding a home for.
According to information shared with the Times by the CRT (Mexico’s Tequila Regulatory Council), that surplus equals about half a billion liters of tequila that isn’t assured a home, either still aging in barrels or ready to bottle in steel vats. “Much more new spirit is being distilled than is being sold, and inventories are starting to accumulate,” Bernstein analyst Trevor Stirling is quoted as saying. “The tequila industry is set for a very turbulent 2025.” There are several different reasons for this. As we’ve reported in recent months, demand for spirits, particularly in the premium and ultra premium price range, has fallen as consumers have gravitated towards less expensive bottles. There are many different low-cost tequila options, of course, but the rapid growth of the category has been driven by higher-end brands, many of them with celebrity backers.
According to drinks analysis company IWSR, spirits sales in the U.S. decreased by 3 percent in 2024 compared to the previous year. Tequila was hit especially hard—consumption rose by 17 percent in 2021, but slowed to four percent in 2023 and decreased by more than one percent last year. According to the Times, two-thirds of all tequila is exported, with about 80 percent going to to the U.S. (Spain and Germany are next, but each at just 2 percent). Mexican farmers are facing financial hardship from falling tequila sales as well, with reports indicating that agave prices have dropped to about six to eight pesos per kilo for those farmers with contracts, and as low as two pesos otherwise. Don’t be surprised if brands take advantage of this and snap up a bunch of cheap agave to distill, even with sales in a slump.
It remains to be seen whether Trump’s threatened tariffs on imports from Mexico will actually become policy, but they could also have a detrimental effect on tequila sales if even bottom shelf bottles are subjected to a price hike. CRT president Ramón González downplayed this to the FT, but that should probably be taken with a grain of salt—his job is to promote the industry, after all, and there are many who are highly critical of the organization’s practices. “When he was president . . . he said exactly the same thing, that there would be tariffs et cetera,” he told the FT. “Not only did he not put taxes on alcoholic drinks, he lowered them.”
This could be a year of major changes in different spirits categories as far as sales and trends, but these could also be temporary or necessary course corrections that reflect a more realistic picture of supply and demand. We will continue to update you as these trends play out, but in the meantime there are still plenty of excellent new tequilas to enjoy now if you are not one of those consumers for which the category has lost its appeal.
